It was a busy year for many, with money laundering sums reaching new highs and AML fines and warnings being issued across jurisdictions. On the plus side we saw some movement in tightening up legislation, new guidance issued, and some successful operations by law enforcement authorities.
A new year beckons, but before we get stuck into all that 2025 will bring, we take a look back at some of the stories that hit the headlines in 2024.
1. SkyCity faces results of DIA review
The year started with a bang and the threat of an NZD$8 million fine for SkyCity over alleged anti money laundering breaches.
After a court judgement was reached later in the year an agreed civil pecuniary penalty of NZD$4.16 million was issued, with John Sneyd, General Manager Regulatory Services, DIA stating:
“Casinos can be an attractive way for criminals to launder proceeds of crime. We cannot take the risk that criminals might choose New Zealand casinos as a way of cleaning their dirty money. Casinos must have robust processes in place to protect them from misuse.”
Breaches of the AML/CFT Act included:
- Implementing and maintaining a compliance programme.
- Monitoring of accounts and transactions.
- Conducting enhanced customer due diligence.
- Terminating existing business relationships when required.
This is a timely reminder to us all to ensure we have robust AML processes in place to protect our businesses from misuse.
2. Hong Kong syndicate launders record breaking sums
Back in February, a huge bust by custom officers saw a transnational syndicate taken down after the laundering of US$1.8 billion through shell companies and bank accounts. Large sums of money were transferred from overseas under the guise of international trading to help launder illicit funds.
Seven suspects were arrested and over US$21.10 million worth of assets were seized.
Transactional monitoring and assessment of risk when dealing with customers from overseas is a key aspect of AML obligations and if not implemented into your business correctly can provide avenues for criminals to exploit.
3. A tale of fake puppies
On a smaller scale but closer to home, a Taranaki man faced money laundering charges earlier this year for allowing perpetrators to use his bank account to redistribute the money gained from selling fake puppies into cryptocurrency before it was moved overseas.
The scam involved victims responding to buy and sell puppy advertisements on Facebook, making payment for a puppy and then being blocked from contacting the seller. The puppy was never delivered, nor the money reimbursed.
4. Cash seized by Australian Federal Police
The police in Australia seized AUD$500,000 in cash, financial documents, electronic devices, mobile phones, fireworks, and a gel blaster firearm in an operation where they suspected over AUD$1 billion had been money laundered.
It was suspected the criminal operation received funds from businesses, and then provided false invoices for fictitious goods or services. Participating businesses would then receive money back as cash minus a commission.
The Serious Financial Crime Taskforce (SFCT), Chief John Ford said:
“We will effectively deal with those who engage in false invoicing, or other illegal financial arrangements and work with partner agencies where appropriate.”
5. Small firms are not immune from regulations
In May a formal warning was issued by the Department of Internal Affairs (DIA) to a sole trader for failure to conduct ongoing customer due diligence and report transactions in accordance with the AML/CFT Act.
This shows, that no matter what size of business you own or are working in, you are not immune to AML regulations and as a reporting entity compliance is mandatory.
6. NZ implements key legislation changes
There were a number of AML legislation changes which saw some amendments this year.
Beneficial ownership – compliance programmes now need to show what procedures and controls you are going to include to identify ultimate ownership and effective control, and the definition of beneficial owner has been updated to incorporate a wider audience.
Companies – there is new guidance surrounding what you now need to collect when you are establishing a business relationship with a company. There is also additional guidance issued on where a company is required to have enhanced customer due diligence completed.
Limited partnerships – the importance of knowing your customer and understanding the way in which the Limited Partnership is structured, particularly the parties involved and the roles they play was clarified.
Trusts – the need to obtain and verify ownership and control was updated. This includes any powers that bind and regulate the trust, and the settlors and protectors of the trust.
Enhanced due diligence – additional information is now required when conducting enhanced due diligence (EDD).
Updated AML/CFT Programme guidelines were published by the Supervisors to support you in updating your framework documents.
Depending on which sector you are in there are some updates on the DIA website which we encourage you to check out also.
These changes should be well established in your programmes by now, but if you need some help contact our team for some expert advice, or learn more about these compliance changes in our blog.
7. Drug bust leads to money laundering scheme
A police investigation run by the Auckland Money Laundering Team saw the shutdown of a criminal syndicate’s operation, allegedly importing and distributing a concoction of illegal substances.
Six people were arrested over the alleged operation that used empty rental properties as part of a money laundering scheme.
Police recovered nearly $1 million in cash and 4.5 kilograms of methamphetamine as well as other drugs.
The officer in charge, Detective Senior Sergeant Andy Dunhill said:
“We have seized numerous devices for forensic investigation, and this will form part of the ongoing investigation into money laundering offences.”
The connection between drug trafficking and money laundering is very real, with the United Nations on Drugs and Crime (UNODC) stating that proceeds from drug trafficking are one of the largest sources of illicit funds or dirty money in need of money laundering.
8. TD Bank makes US history
In October, TD Bank became the first US bank in history to plead guilty to conspiracy to commit money laundering, and received a massive US$3 billion penalty.
It was outlined that TD Bank’s failure to update and implement their AML compliance programme made the bank an easy target for criminal activity and allowed corrupt bank employees to facilitate a criminal network’s laundering of tens of millions of dollars.
U.S. Attorney Philip R. Sellinger for the District of New Jersey stated:
“As a result of staggering and pervasive failures in oversight, it willfully failed to monitor trillions of dollars of transactions.”
Other failures included:
- Running a transaction monitoring programme which did not address deficiencies despite federal regulators and internal audit groups raising concerns.
- Failure to appropriately fund and staff its AML programme.
- Lack of automatic monitoring of numerous transaction types.
Investigating authorities found more than US$670 million was laundered through TD Bank accounts between 2019 and 2023.
9. Beneficial ownership changes for Australia
Without a beneficial ownership register in New Zealand it can be difficult for entities to make reliable identification of beneficial owners. It would seem the Australian government agree, with their announcement in November of the first stage in its commitment to implement a public beneficial ownership register.
A register would be useful as it would mean information on beneficial owners of companies would become more accessible and make it easier to make reliable identification.
The Australian government plans to start its beneficial ownership disclosure project with listed companies. A step towards helping beneficial ownership disclosure which may also help Australia’s compliance with Financial Action Task Force (FATF) recommendations.
Will New Zealand follow? We’ll have to wait and see.
10. AUSTRAC expands its regime
There has long been debate on when Australia will extend its AML laws to so called tranche 2 entities and it now looks like the time is finally upon us. These entities include legal professionals, accountants, real estate agents, trust and company service providers, and dealers in precious stones and metals.
Since AML legislation was introduced to Australia in 2006 tranche 2 entities have not had to implement AML requirements outlined in the Australian AML/CTF Act. However, in November an amendment Bill passed Parliament which expands the regime to certain high-risk services provided by tranche 2 entities.
AUSTRAC CEO, Brendan Thomas stated:
“The measures in the bill will assist industry and AUSTRAC to better identify and mitigate the significant risks of money laundering and terrorism financing, by expanding the regime to regulate high-risk services in new sectors and improve the level of financial intelligence collection.”
It is expected AML legislation will be applied to tranche 2 entities from 1 July 2026.
Summary
As we move into 2025, we’re sure there will be many more cases hitting the headlines as criminals look for ways to take advantage of any regulatory gaps. In turn regulators will continue to enforce legislation as AML rules become more embedded in our day-to-day business activities.
To stay on the right side of the regulators and to help combat financial crime, ensure your AML compliance programme is up to scratch, properly reflects your business risk, and your staff are well-trained to implement and follow procedures.
If you need a little help keeping on track or setting up your programmes, contact us on 09 09 369 6867 or email info@ticcompany.com.
Interested in more money laundering stories?
Pick up a copy of Rinsed by Geoff White, recommended by Jerome, our Chief of Revenue & Product, and you will be fascinated by the innovative ways Money Launderers operate. Who could resist a holiday read where AML is on the agenda!
